CLIMATE CHANGE

The Green Economy is recognised as the driving force for sustainable development and the elimination of poverty. The ICT sector can make a significant contribution to developing the economy, improving energy efficiency and combating climate change, as demonstrated by several studies and analyses of the ICT industry, recently confirmed by the SMARTer 20301 Report published in 2015 by the Global e-Sustainability Initiative.

The Group’s approach to the fight against climate change is based on three synergistic levels of action:

  • reducing their own direct and indirect emissions of greenhouse gases;
  • limiting the emissions of other sectors and customers in general by supporting virtualisation and the provisions of services that promote new ways of working, learning, travelling and living;
  • contributing to disseminating a culture based on a correct approach to environmental issues inside and outside the Company.

Reduction of emissions

The environmental impact of Telecom Italia in terms of CO2 emissions is essentially determined, as shown in the following paragraphs, by direct emissions from the use of fossil fuels, indirect emissions through the procurement of electricity and other indirect emissions due for example to home-work commuting and air travel by staff.

For details of current activities aimed at reducing emissions see the Environnental performance/Energy and Environmental performance/Emissions sections.

Risks associated with climate change

The risks associated with climate change for the telecommunications sector have implications of a physical, economical and regulatory nature, with major repercussions even on the image and reputation of the company. Climate change causes changes in meteorological models that can result in extreme situations.

In Italy, in particular, considerable flooding has occurred in recent years, which has had a devastating impact on vast areas of land, cities and infrastructure.

Telecom Italia’s installations, network infrastructure and Data Centres are spread across the country and the Company believes that flooding is one of the most serious physical risks and the one most likely to occur. The evaluated effects consist of damage ranging from reduced use to loss of properties and, in extreme cases, total loss of the ability to provide the service to customers.

In order to prevent or limit the potential damage, Telecom Italia’s new exchanges and buildings are built at a safe distance from rivers and bodies of water in general and, in order to ensure continuity of service, the network is designed considering appropriate levels of resilience and redundancy.

In Italy, the situation of the network infrastructure, particularly areas where there is a heightened hydro-geological risk, is monitored using the company’s Ci.Pro. (Civil Protection) system, which uses a database of information relating to the territory and infrastructure, which is continuously updated with a view to planning the work required as quickly as possible. Lastly, the physical risks to which company assets are in any case subject, are managed by insurance cover that takes into account the value of the structure and equipment as well as any effects that these catastrophic events would cause for the service.

Changeable weather conditions increasingly give rise to extreme meteorological conditions and TIM Brasil has developed technologies and applications for effective and continuous monitoring, particularly in areas at greatest risk The Company has also invested heavily in advanced infrastructure and technologies, not only to guarantee the continuity and quality of the service offered to customers, but also to improve efficiency and reduce the consumption associated with its operations. At present in Brazil most of the electricity is generated by hydroelectric plants. Long periods of drought can lead to a dramatic reduction in the availability of electricity, to an increase in its cost and to increasing recourse to fossil fuels. Lower availability of water in water basins may lead to the rationing of energy and significant fluctuations in the cost per kWh.

In Brazil, in legislative terms, the national policy on climate change, which was defined in 2009 and is governed by decrees N. 7,390/2010 and 7,643/2011, supplemented by sectoral plans for mitigation and adaptation to climate change, provides for greenhouse gas emissions to be reduced by between 36.1% and 38.9% by 2020. The telecommunications sector is not currently involved directly, but it might be in a not too distant future. In the states of São Paulo and Rio de Janeiro, which are the ones where most of the Country’s industrial and commercial activities are concentrated, specific state laws have been introduced on climate change: in future, TIM might also be asked to develop its own greenhouse gas emission reduction plan if the telecommunications sector is expected to contribute by setting quantitative reduction objectives, even on a voluntary basis.

A considerable amount of TIM’s emissions are associated with electricity consumption, particularly by the network infrastructure. Energy industry policies tend to lead to an increase in the cost of energy and these increases are in turn transferred to users, and therefore to TIM (although the cost of electricity accounts for just over 5% of the total operating costs), which may see an increase in the cost of the goods and services it buys from suppliers.

Extreme weather conditions like highly frequent high intensity storms can damage the network infrastructure, particularly transmission towers and pylons, thus increasing the cost of management and insurance against risks, reducing coverage, weakening the signal and interrupting the service. Variations in the levels of humidity and salinity in the air can reduce the service life of equipment. Furthermore, an increase in the average temperature can lead to a greater consumption of electricity by air conditioning and cooling systems. Potential flooding make it difficult for staff to travel and do their work, thus reducing the efficiency of the system.

Opportunities associated with climate change

The ICT sector is required to play an important part in the fight against climate change by promoting the replacement of physical products and traditional services with digital products and processes (also see Digitisation, connectivity and social innovation/Research & development and innovative services chapter) that can promote the virtualization of the society by reducing the need for people and goods to travel. For example:

  • audio/video conferencing services and teleworking reduce the need for people to travel;
  • on line invoicing and payments, in addition to saving paper and therefore the energy required to produce and transport it, eliminate the need for transport to make payments;
  • telemedicine services reduce the need for doctors to meet patients in person;
  • infomobility systems, using information obtained from mobile handsets, allow the optimisation of traffic flows, reducing travel times and the emission of greenhouse gases;
  • systems for the monitoring and analysis of consumption allow the optimisation of the energy efficiency of offices and dwellings.

The efficiency improvements, savings achievable in economic terms and reduced environmental impacts associated with the use of these services are an interesting business opportunity for the Company, particularly considering the sensitivity of its stakeholders and citizens in general to the need to achieve significant reductions in greenhouse gas emissions and ensure a sustainable future for the planet and society. One example is illustrated in the box and relates to the Digital Territory Programme.

In Brazil too, climate change can affect the behaviour of investors, who increasingly tend to give priority to companies that are transparent about how they manage emissions and show that they know how to assess and anticipate potential risks and seize opportunities. As a demonstration of its commitment, in 2015 TIM Participações S.A. was again included in the BM&FBovespa’s Corporate Sustainability Index (ISE) for the eighth year running, and in January 2016 in the Carbon Efficient Index, ICO2, for the sixth year running.

TIM Brasil believes that in the not too distant future Brazilian legislation will make it compulsory for various industrial sectors to report their greenhouse gas emissions. For this purpose, its emissions have been quantified and communicated transparently since 2008, the CDP questionnaire has been completed since 2007 and the company has been involved in the national EPC (Empresas pelo Clima) programme since 2010 and this could be a competitive advantage.

Digital Territory Programme (2012–2014) and its development into Digital Life (2015–2017)

In the context of public sector services, in accordance with the Italian Digital Agenda or ADI (Agenda Digitale Italiana) and European Directives, Telecom Italia has developed its offer of Smart Services: a range of services for energy efficiency and digital services in urban areas which achieved revenues of 1,140,000 euros in 2013 and 2,000,000 euros in 2014.

Also in 2013, Telecom Italia launched a rationalisation of its Smart Services offer, which it combined with Urban Security and Nuvola It Energreen, which deliver new services dedicated to security, the environment and efficient energy management, providing a comprehensive response to the needs of cities and surrounding areas. The aim is to promote the “smart city” model to improve quality of life by developing innovative digital services. In 2015 the Digital Life programme produced revenues of 2.5 million euros. The following offers2 will be part of the Digital Life Programme and become the Service Elements for the creation of Smart Cities:

Lighting Suite (replaces and supplements the previous Smart Town offer) for the integrated management of local infrastructure networks and for the construction of Smart City environments (for a description refer to the Digitisation, connectivity and social innovation chapter).
Energy saving is estimated within a range of values between 15% (light produced by high-efficiency lamps, e.g. LEDs) and over 30% in the case of light produced by old style lamps (e.g. sodium vapour or incandescence). Added to these values is the option of varying lighting by switching on and/or reducing the intensity of individual lamp posts.
Assuming that average per capita energy consumption in Italy is 107 kWh3 and applying a 20% reduction (the replacement of conventional lamps with high efficiency ones is in progress in many towns) a town of 100,000 inhabitants would be able to achieve a total annual saving of 2,140,000 kWh, corresponding to 827 t of CO2 emissions avoided4.

Smart Building namely ad hoc solutions for the smart management and automation of buildings able to be implemented on a project basis through the components of the Lighting Suite and Nuvola IT Energreen offers (for a description refer to the Digitisation, connectivity and social innovation chapter).
The energy saved can be estimated at around 10%, if only the Metering & Reporting function is implemented, but it can rise to over 50% for specific energy efficiency projects.

Nuvola IT ENERGREEN, for the remote management of energy consumption, implemented on Telecom Italia assets and services for the purpose of saving energy. The services proposed are the following:

  • On-site energy audit: on-site analysis for energy efficiency
  • Metering & Reporting
  • Efficiency strategy: advanced reporting and Energy Management consulting services
  • Energy Cost Management Services
  • Special Projects: ad hoc energy efficiency improvement work.

The energy saved can be estimated at around 10%, if only the Metering & Reporting function is implemented, but it can rise to over 50% for specific energy efficiency projects.

Nuvola IT Urban Security for the management of participated security and urban territory control.

Nuvola IT Urban Security is the Cloud platform of Telecom Italia | TIM, offering a suite of automated and integrable solutions that allow the online monitoring and management of important topics concerning the city and the region, both of public interest (e.g.: mobility, road control, polluting agents) and connected to the activities of companies and organizations (e.g.: inspections, maintenance).

It is a scalable and flexible solution which, on the one hand fits in with the offers for the Smart City of Telecom Italia | TIM according to the guidelines of the Italian Digital Agency and, on the other, meets the needs of companies that also operate in the region (for a description refer to the Digitisation, connectivity and social innovation chapter).

The revenue trend (in millions of euros) assumed by Telecom Italia for the overall programme over the next three years is the following:

  • 2016: 4
  • 2017: 6
  • 2018: 7

       

1 The “SMARTer2030 report: ICT Solutions for 21st Century Challenges” represents the upgrading of the SMART2020 and SMARTer2020 studies respectively published in 2008 and 2012 by the Global e-Sustainability Initiative.

2 The actual names of the services offered may vary once work is under way.

3 Source: from the blog of the Italian Government Commissioner for the Spending Review.

4 Using the 2009 conversion factor for Italy calculated by the GHG Protocol, which is 0.3864 kgCO2/kWh.